United States

Softer-than-expected economic data reinforced speculation that policymakers may act to support growth amid signs of a slowing economy and easing inflationary pressure. The S&P 500 rose 0.4%, bringing its gains for the week to over 2%, while the Dow Jones Industrial Average added 0.65% on strength in defensive sectors. The Nasdaq 100 finished flat as megacap technology stocks lost momentum, with the “Magnificent Seven” index slipping 1.1%.

Traders reacted to a surprisingly sharp 0.5% decline in producer prices—the largest drop in five years—raising hopes that inflation may continue to moderate without the need for further tightening. Retail sales grew at their slowest pace in six months, while industrial production also declined. Adding to the downbeat tone, the New York Fed’s manufacturing index remained in contraction, and homebuilder sentiment fell to its lowest level since January.

Bond markets rallied in response, with yields retreating across the curve. The 10-year Treasury yield tumbled 10 basis points to 4.43%, while the 2-year dropped to 4.74%. Fed fund futures now fully price in two 25-basis-point rate cuts by December. The Bloomberg Dollar Spot Index fell 0.2% as the greenback weakened against most majors. The Japanese yen rose 0.8% and the British pound gained 0.3% to USD 1.3305.

While rate-sensitive growth stocks came under modest pressure, cyclical names and dividend payers found renewed interest. Meta Platforms underperformed following reports it would delay the release of a flagship AI model, while Applied Materials issued a cautious outlook in post-market trading, signalling some cooling in semiconductor demand.

Investors remain focused on upcoming inflation data, tariff policy developments, and comments from Fed Chair Powell for further direction. Despite the recent rebound, strategists warn of summer volatility amid elevated valuations and lingering trade uncertainties.

Europe

European equities climbed, with the Stoxx Europe 600 rising 0.6% to notch its best session in over a week, driven by a rotation into defensive sectors and improved sentiment following dovish signals from US economic data. Gains were led by utilities, telecoms, and financials, while energy underperformed as oil prices slid.

Deutsche Telekom rose 2.8% after reporting stronger-than-expected Q1 earnings, highlighting resilient demand in Germany’s mobile market. Meanwhile, French video game maker Ubisoft plunged 18% after forecasting flat sales growth for the coming fiscal year, and Salvatore Ferragamo dropped 3.1% as it flagged soft consumer demand in April. Shares in Siemens and Allianz also declined after posting earnings that disappointed investors.

The broader tone in Europe remained cautious. While the risk of a near-term recession has diminished, the region continues to struggle with subdued growth and sticky core inflation. The recent rally—largely driven by optimism around the US-China trade truce and a potential Fed pivot—now faces a test as investors look for fresh catalysts.

Bond yields fell in line with US Treasuries. Germany’s 10-year bund yield declined 8 basis points to 2.62%, and the UK 10-year gilt yield eased to 4.66%. The euro held steady at USD 1.1184. Market participants are watching closely for any shifts in ECB rhetoric ahead of next month’s policy meeting.

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

Commodities

Commodities were mixed overnight. Crude oil fell sharply, with Brent down 2.2% to USD 64.63 a barrel and WTI declining 2.1% to USD 61.80. Sentiment was weighed by news that the US and Iran are reportedly nearing a deal on nuclear negotiations, which could lead to an easing of sanctions and more oil supply hitting the market.

Gold surged 2% to USD 3,239.23 an ounce, its highest level in over two weeks, as falling yields and a weaker dollar supported demand for safe-haven assets. Silver and platinum also advanced, while copper traded flat, holding near USD 9,600 as traders weighed macroeconomic softness against stable industrial demand in China.

Iron ore eased 0.3% to USD 101.50 a tonne, consolidating recent gains amid subdued steel production and tighter credit conditions in China. Despite the pullback, expectations for sustained infrastructure activity across Asia continue to provide medium-term support.

The Australian dollar dipped 0.3% to USD 0.6407, weakening alongside commodity prices despite improved sentiment toward risk assets. The US dollar broadly retreated as investors shifted focus toward potential policy easing. In crypto markets, Bitcoin fell 0.7% to USD 102,833 and Ethereum dropped 2.7% to USD 2,530.39, with both currencies cooling after a period of speculative strength.

Economic Calendar

US:

• University of Michigan Consumer Sentiment (May) 00:00